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ANSWER:

Specific details may vary depending on where you live and the type of work you’re having done, but generally the payment procedure for contractors should follow certain guidelines.

First, it’s important to get it in writing. Even for a relatively small project, a detailed description of what is to be done is crucial. The contract should also clearly set out the terms of payment. Avoid large upfront payments before work has been started. A small percentage of the full payment is usually all that’s required to secure the contractors time to do the job. Once work has begun, payments should be made based on the work completed or milestones achieved, such as passing inspection rather than a certain amount of time. Do not pay cash; payments should be made by cheque and get a signed and dated receipt for each payment. It’s important to have a paper trail in case issues arise. Never pay the balance of the contract before all work has been completed to your satisfaction.

As an example let’s say you’re having your basement finished. 10% might be paid when work begins, then another 25% when the framing, electrical and other rough-ins have been completed and passed. Then an additional 25% when insulation and drywall has been completed. Then a further 25% when the trim and painting is finished. Rules vary by jurisdiction but generally a “hold back” of at least 10% for 30 days after the work has been completed, is a good safety measure. This will ensure that if any problems arise the contractor will be back to fix them.

Expert's Bio

Charles Bull manages a design build construction company in Toronto, Canada, spending his days looking into everything from permits to the latest green building methods. With more than 15 years of experience in residential real estate, construction and renovation under his belt, Charles knows the answers to your home renovation queries — or will find them out if he doesn’t!